A decade ago defense tech was considered a niche, even controversial corner of venture capital. Few startup investors dared to bet on companies working with the military.

That's changed fast. More than $14.6 billion in venture investment has gone into defense, national security and law enforcement startups through the first five months of 2026, blowing past the sector's previous annual record of $9.6 billion raised in all of 2025.

The rise has been building for years. Global defense tech funding totaled $1.6 billion in 2020 before climbing to $3.9 billion in 2021. Funding then held relatively steady between $2.8 billion and $3.8 billion from 2022 through 2024. That changed last year when it jumped to $9.6 billion. Now five months into 2026, the full-year record is already broken.

The biggest contributor by far is Anduril Industries, which closed a $5 billion Series H at a $61 billion valuation. But it's not alone - Shield AI raised $2 billion, Saronic secured $1.75 billion for autonomous naval vessels, and Mach Industries announced a $300 million Series C today at a $1.8 billion valuation. Deal flow has stayed steadier while check sizes balloon - 107 rounds so far versus 206 in all of 2025. The capital is concentrating into fewer, bigger bets.

Investors are starting to eye exits too. AI drone company Swarmer went public this year and its stock soared over 500% on its first day of trading. Anduril is widely viewed as the most likely IPO candidate - a public offering at that scale would be the first real test of public-market appetite for next-gen defense contractors.